Malaysia's Sime Darby Berhad is looking to buy refineries in Latin America as it faces low margins and rising costs, the company said. Bloomberg on May 14th.
The company has set aside RM400M (US $ 96M) to invest in refineries, although more would be needed for acquisitions and may consider turning to the debt market or share listing, said Mohd Haris Mohd Arshad, CEO of the downstream business group. .
Haris said Sime Darby had Latin America “on its radar” as it looked to expand its global refining capacity.
“If there are opportunities for us to acquire downstream assets in Latin America, we would be very interested,” said Haris, who is also a director at Sime Darby Oils.
“This could potentially become an extension of our operations in Europe and in addition be an opportunity to expand into North America.”
Sime Darby had to travel to Liberia and Papua New Guinea to obtain more land for harvesting as Malaysia pledged to stop expanding plantations, the company wrote. Bloomberg .
Latin America's proximity to Europe (the second largest buyer of palm oil) was the appeal, according to Haris.
Relative to Europe's strict regulations on the quality of imported palm oil, Latin America's shorter sailing time of 14 days – compared to Malaysia's 30 days and Papa New Guinea's 45 days – would mean a lower risk of oil degradation.
Colombia was the world's fourth largest producer of palm oil, and there was also some production from Guatemala, Ecuador, Peru and Brazil, wrote the Bloomberg .
Posted by: Marina Carvejani
Author: OFI Magazine
Source: OFI Magazine
